A workman has taken a loan from Employees' Co op Credit Society and repayment being done through salary deduction. Subsequently, he was dismissed from the services for certain misconduct after holding enquiry. There is a dues pending to the Society. Now, can we adjust his Gratuity amount against the Society dues. Sec.4 (6) of the Payment of Gratuity Act, 1972 reads as follows: "(a) the gratuity of an employee, whose services have been terminated for any act, wilful omission or negligence causing ay damage or loss to, or destriction of, property belonging to the employer, shall be forfeited to the extent of the damage or loss so caused; (b) the gratuity payable to an employee may be wholly or partially forfeited; (i) if the services of such employee have been terminated for his riotous or disorderly conduct or any other act of violence on his part, or (ii) if the services of such employee have been terminated for any act which constitutes an offence involving moral turpitude, provided that such offence is committed by him in the course of his employment.
Further, in the loan application form, it is specifically mentioned as a condition that the member agrees for adjustment of the society loan dues from Gratuity, Bonus, PF and any other payables. Apart from that, it is also mentioned in the loan form that in case the member is dismissed or resigned or retired from the job, if there is any dues at that time to the Society, the member agrees to pau both principal and interest to the Society.
Management does not want to recover the amount from the Guarantor as it will lead to other IR issue. Is it right on the part of the Management to forcefully adjust the Gratuity amount payable and settle the balance Grauity,if available. What is the legal status. Is there any judgement on this issue.
Request friedns to throw some light on this.

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